Commercial Real Estate Law

Author: Dharam Dhillon

On October 9, 2020, the federal government announced the Canada Emergency Rent Support program (“CERS”), as the successor program to the Canada Emergency Commercial Rent Assistance program (“CECRA”), which offered commercial rent relief to eligible businesses from April 2020 to the end of September 2020. The purpose of CERS is to help eligible businesses adversely impacted by COVID-19 by providing commercial rent and mortgage support until June 2021. See our previous bulletin regarding the October 9, 2020 announcement here. A key distinguishing feature of this new program is that eligible businesses may apply for and receive subsidies directly rather than requiring participation by their landlords.

On November 2, 2020, the federal government introduced Bill C-9, An Act to Amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy) (the “Act”) implementing  the operation of CERS as well as the applicable eligibility criteria. A brief summary of the details (known as at the date of this bulletin) is outlined below as we address the following questions:

  1. Who will be eligible for CERS?
  2. What timeframe will CERS apply to?
  3. What support will CERS provide?
  4. How will revenue decline be calculated?
  5. If you suffered a revenue decline, how much relief are you entitled to?
  6. “Lockdown Support” (what qualifies as a public health restriction?)
  7. What are eligible expenses?

1. Who will be eligible for CERS?

Eligible entities under CERS are individuals, taxable corporations and trusts, non-profit organizations and registered charities that meet one of the following criteria:

  • have a payroll account as of March 15, 2020 or have been using a payroll service provider;
  • have a business number as of September 27, 2020 (and satisfy the Canada Revenue Agency that it is a bona fiderent subsidy claim); or
  • other conditions that may be prescribed in the future.

Note that the federal government’s intention is to maintain eligibility criteria that is consistent between CERS and the Canada Emergency Wage Subsidy program.  This is outlined further in the Technical Backgrounder released by the Department of Finance found here (the “Backgrounder”).

2. What timeframe will CERS apply to?

Given the information available to date, CERS is intended to be available retroactively and will provide support to eligible entities from September 27, 2020 to June 2021. However, the recent announcement only provides details regarding the first 12 weeks of the program (until December 19, 2020). Operation of CERS thereafter remains unknown and subject to change.

3. What support will CERS provide?

CERS will provide eligible entities who have suffered a reduction in revenue with: (i) a base subsidy of up to 65% of eligible expenses, and (ii) an additional top-up subsidy, referred to as “Lockdown Support”, of up to 25% of eligible expenses for businesses that are impacted by a public health restriction.

4. How will revenue decline be calculated?

The amount of base subsidy that an eligible entity will be entitled to is a function of the revenue decline suffered over a certain timeframe. Specifically, the revenue decline will be calculated with respect to reference periods, which are laid out for first the first 12 weeks as follows:

  • September 27, 2020 to October 24, 2020;
  • October 25, 2020, to November 21, 2020; and
  • November 22, 2020 to December 19, 2020.

Revenue decline will be calculated for each of the reference periods as noted below. In line with the federal government’s intention for CERS to be flexible, an eligible entity may choose to compare the revenue from its current reference month to:

  • its monthly revenues, year-over-year, for the applicable calendar month; or
  • the average of its January and February 2020 revenues.

Once an eligible entity has elected one of the above noted approaches, they must use that same approach for each of the remaining reference periods.

5. If you suffered a revenue decline, how much relief are you entitled to?

As mentioned above, the maximum base subsidy available is 65% of eligible expenses. However, this amount of base subsidy is only available to eligible entities with a revenue decline of 70% or more. The base subsidy then declines on a sliding scale basis to a rate of 40% for eligible entities with a revenue decline of 50%, and thereafter gradually reduces to zero for those not experiencing a decline in revenues. Examples of these calculations are set out in the table below.

Revenue Decline = Base Subsidy Rate

70% and over  = 65%

50% to 69% = 40% + (revenue drop – 50%) x 1.25
(e.g., 40% + (60% revenue drop – 50%) x 1.25 = 52.5% subsidy rate)

1% to 49% = Revenue drop x 0.8 (e.g., 25% revenue drop x 0.8 = 20% subsidy rate)


6. Lockdown Support – what qualifies as a public health restriction?

The Act provides that Lockdown Support is available to eligible entities where, as a result of a public health order, some or all of its business activities must cease or are restricted for at least one week, and it is reasonable to conclude that at least approximately 25% of the revenue of the eligible entity can be attributed to such restricted activities. For the purposes of Lockdown Support, such an order or decision must be, among other things, issued or made in connection with the COVID-19 pandemic and limited in scope to:

  • a defined geographical boundary;
  • a type of business or other activity; or
  • risks associated with a particular location.

Those organizations so impacted under this criteria will be eligible to receive an additional subsidy equal to 25% of the qualifying rent expense for each applicable qualifying period.

7. What are eligible expenses?

Eligible expenses are referred to as “qualifying rent expenses”. Qualifying rent expenses refers generally to the amounts paid under a written agreement (typically a lease) entered into before October 9, 2020 with a non-related third party for the right to use certain property, less any amounts received pursuant to a sublease, if applicable.

Qualifying rent expenses can include:

  • Gross rent;
  • Percentage Rent;
  • Amounts paid under a net lease; and
  • Certain amounts received by the landlord under the CECRA program that were applied during the qualifying period, if those amounts would otherwise be required to be refunded to the tenant.

Qualifying rent expenses do not include:

  • Sales taxes;
  • Amounts paid in lieu of or in satisfaction of damages;
  • Amounts paid under a guarantee, security, or similar indemnity or covenant;
  • Payments arising due to default;
  • Interest and penalties on unpaid amounts;
  • Fees payable for discrete items or special services; and
  • Reconciliation adjustment payments.

For eligible entities that are not leasing but instead own property, qualifying rent expenses can include:

  • Mortgage interest, subject to certain exceptions,
  • Insurance costs paid in respect of the property; and
  • Property and similar taxes, including municipal and school taxes in respect of the property.

Note that relief for each reference period is capped at $75,000 per location and will be subject to an overall cap of $300,000 that would be shared among affiliated entities.


CERS is intended to be a comprehensive, and more flexible, successor program to CECRA. Based on the information we have to date, it appears that the federal government is taking a flexible approach in designing CERS to ensure that eligible entities receive the relief they require. The federal government is also achieving a higher sense of convenience and predictability by maintaining consistent qualification criteria with the Canada Emergency Wage Subsidy program.

It is important to note that the Act has not yet come into force, and therefore CERS, remains subject to further amendments. We will continue to provide updates regarding CERS as information becomes available.

Should you require any assistance in understanding your obligations given your circumstances, please feel free to reach out for specific legal advice.  We will continue to provide updates regarding this topic as they become available.

Contact: Dharam Dhillon, phone: 604.891.1153, email:

This bulletin is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.